Motorola Mobility plans to make fewer handsets, make a bet on Intel's unproven (so far) mobile platform and issued a fourth quarter profit warning.
How's that Motorola acquisition looking right now Google?
Given the moving parts with Motorola, it's worth asking whether Google $12.5 billion move to buy the smartphone maker adds up. Google will take on 19,000 employees and get a patent portfolio to protect Android. It'll also potentially alienate partners like Samsung and HTC. Meanwhile, Motorola is starting to look a bit like a fixer upper.
- At CES (CNET full coverage), Motorola CEO Sanjay Jha told reporters that the company plans to release fewer new models to focus its marketing better. On the surface, the move makes sense. However, Motorola Mobility will increasing need its devices to be hits. Simply put, the company will be up to bat fewer times.
- In addition, Motorola has formed a multi-year, multi-device partnership focused on smartphones powered by Intel's Atom processor. Tablets will also be included. The move is good for Intel since it's trying to grow its mobile footprint. The bad news is that Intel's platform is largely unproven in a mobile world dominated by the ARM architecture.
- And the fourth quarter was weak. Motorola should have been cleaning up in the fourth quarter, but stumbled. Fourth quarter unit shipments were 10.5 million, well below Jefferies estimates of 14.6 million. Total revenue for the fourth quarter was projected to be $3.5 billion, below the Wall Street estimate of $3.9 billion. What's going on? Jefferies analyst Peter Misek said that Google doesn't want to compete with its Android partners. As a result, Motorola is going to focus on high end devices only.
Regulators still have to approve Google's purchase and analyst expect the deal to close by the end of March. That timing is fortunate since it's unclear Motorola's quarters will be able to hold up going forward.